Lawmakers pushing to tie California minimum wage to consumer price index
Published Tuesday, Apr. 24,
2012 - The Sacramento Bee
Gasoline was selling for $3.33 a gallon, Jerry Brown was attorney general,
and California was bracing for a budget crisis when the state's hourly minimum
wage rose to $8 in early 2008.
Fast forward to now, and much has changed: Gas is almost a dollar higher,
Brown is governor, and the state is reeling from years of red ink. But the
minimum wage hasn't budged a cent.
New legislation would change that, ensuring future increases for the state's
lowest-wage workers while letting lawmakers evade political heat by taking the
hot-button issue out of their hands.
Assembly Bill 1439 by Assemblyman Luis Alejo would prohibit the minimum wage
from being lowered as consumer prices fall but would mandate increases as prices
rise. The indexing would be expected to hike the minimum wage about 14 cents
next January, but more importantly, it would set the stage for what could be
annual hikes in years to come.
Alejo, D-Watsonville, bills his measure as a way to boost the economy by
putting more money in the pockets of workers struggling to provide food, clothes
and housing for their families.
"When minimum-wage workers have more money to spend, they spend it," he said.
"They can't afford to save it. That is good for all businesses."
The state Chamber of Commerce has labeled AB 1439 a "job-killer" bill. Other
opponents range from the California Restaurant Association to the California
Farm Bureau Federation.
"Now is not the time to increase the cost of doing business in California,
when businesses are just now showing signs of recovery," said Jennifer Barrera,
a chamber lobbyist.
AB 1439 puts the minimum wage on "autopilot," Barrera said, "which we don't
think is appropriate." Lawmakers should not simply let statistics dictate rates
without considering other factors, she said.
Nineteen-year-old Karen Haines is among those who would be affected by AB
1439. She makes minimum wage preparing footlong Subway sandwiches in downtown
Sacramento. Money is tight, and when gas prices rise a few cents, she feels
"It hurts," she said. "Food is more expensive, gas is more expensive – and
you need gas to go to work."
Haines said she can get by on minimum wage only because she is single, has no
children and lives with her parents. At $8 an hour, there is no way she could
move out, she said.
"I think a lot more people would be able to live on their own, have places to
stay, not be out on the street," she said of AB 1439.
Only a tiny portion of California's work force receive the minimum wage, 4.4
percent, according to the state Employment Development Department.
But AB 1439 would have a domino effect, sparking demands for salary hikes
from higher-paid employees and increasing the amount of temporary and permanent
disability payments made through the workers' compensation system, opponents
contend. Businesses would have no way of fighting minimum wage hikes or planning
for a rate increase if inflation erupted suddenly, critics argue.
"(AB 1439) puts it on a one-way escalator: In good times it goes up, and in
bad times it goes up," said Daniel Conway, spokesman for the California
AB 1439 could serve as a disincentive for businesses to relocate to
California or for existing businesses to stay, the state chamber contends.
California's current $8 minimum wage is 75 cents higher than that of the federal
government and ranks seventh highest among the 50 states.
Ten states tie minimum-wage increases to inflation in goods and services.
Economist Sylvia Allegretto, of the Institute for Research on Labor and
Employment at UC Berkeley, argues that AB 1439 does not go far enough.
California's $8 rate is worth less, when adjusted for inflation, than the
minimum wage in 1979, she said.
"I'd rather see a bump in the minimum wage (now), then indexing along with
it, year after year, so it doesn't erode," she said.
Alejo proposed a bump-and-index bill last year, but it died before reaching
the Assembly floor. "I'm trying to see if we can find a middle ground," he said
of this year's effort.
AB 1439 passed the Assembly's Labor and Employment Committee last week on a
party-line vote, with Republicans opposed. It now goes to the Assembly
Appropriations Committee. Gov. Jerry Brown has taken no position on the bill,
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